Medicaid Fraud Fighters

A small pharmacy in the Keys has earned millions exposing Medicaid fraud.

In August 2011, Attorney General Pam Bondi filed a three-paragraph statement announcing a $26.6-million settlement with Par Pharmaceutical Cos. At the bottom of that statement was a reference to a small Florida pharmacy called Ven-A-Care of the Florida Keys.

The company filed the initial whistleblower’s lawsuit that accused Par Pharmaceuticals of inflating prices of its drugs and overcharging Medicaid. As its reward, Ven-A-Care will receive at least $23 million from the $156 million multi-state settlement.

Since it won its first $40-million Medicaid fraud settlement in 2000, Ven-A-Care has become the most successful health care fraud whistleblower in the country, generating millions by blowing the whistle on drug companies that overcharge Medicare and Medicaid. To date, Ven-A-Care has uncovered more than $2.5 billion in fraud, according to Taxpayers Against Fraud. According to a report by Public Citizen, a consumer watchdog group, Ven-A-Care accounts for half of the $6 billion in settlements generated by whistleblowers over a 20-month period ending in July 2012. While others have tried to mimic their success, none have come close, says Patrick Burns, spokesman for Taxpayers Against Fraud.

Ven-A-Care keeps a low profile and did not respond to a request for an interview. Company principals include Luis Cobo, Terry Mark Jones and John Lockwood. Zachary Bentley founded the company but is no longer listed on the company’s corporate registration documents. According to news accounts, the pharmacy started in 1987 as a way to supply drugs intravenously to AIDS patients. Its four founders discovered pricing discrepancies and filed the company’s first false claims suit in the early 1990s, settling that case in 2000.

Ven-A-Care’s success also highlights a weakness in Florida’s fraud-fighting efforts. Though Ven-A-Care is based in Florida, it often chooses to file lawsuits first in other states. That’s because Florida has a reputation for not wanting to aggressively pursue whistleblower lawsuits, Burns says. Most of Florida’s revenue from Medicaid fraud fines and settlements comes from multi-state investigations launched in other states. For instance, since Bondi took office in January 2011, 62%, or $182 million, of revenue from settlements and fines came from multi-state investigations.

Public Citizen’s report shows Florida ranks at the bottom compared to other states when it comes to collecting single-state legal settlements from the pharmaceutical industry. It ranks third worst at Medicaid dollars recovered per $1,000 spent at $1.36 and its return on investment per enforcement dollars spent is 12 cents. States such as Texas, Louisiana and South Carolina do a far better job. But Florida does earn more money from financial penalties through multistate settlements than any other state, except Texas, according to Public Citizen.